Email

THE first point to note in the latest budget announced by the government of Prime Minister Narendra Modi is the gap between reality and rhetoric.

For a government that claims it is focused on outcomes, the spending on social sectors speaks volumes. Despite the tall claims made by the finance minister during his speech on the various programmes run by his government to enhance outcomes in health and education — two areas in dire need of urgent state action not just in India but in all countries of South Asia including Pakistan — the actual allocations made in these sectors remains woefully inadequate.

Some have calculated that the combined allocation for health and water and sanitation has actually come down in the budget, even as the total allocation for health rose by a nominal 2.8pc of GDP. Likewise for education, the total allocation has increased by 4pc, which is less than the CPI inflation rate, showing that rhetoric is more important to the government than actual outcomes in this crucial area. This is particularly noteworthy because it runs against the government’s own stated goals. In the health sector, for example, the goal is to bring resource allocation to 2.5pc of GDP by 2025 (it stands at 1.4pc today).

The second point to note is that the home-grown programme of shock therapy that was the demonetisation drive has produced limited results. The cash-to-GDP ratio was supposed to come down suddenly, but instead it stabilised by June 2017. After that, according to the Economic Survey, the reduction in cash-to-GDP was 1.8pc, which is appreciable but still cannot be considered a satisfactory outcome given the massive shock to the economy that it entailed.

The government appears serious in its efforts to promote documentation, by introducing the GST as soon as the shock of demonetisation receded. But the finance minister’s claim during the budget speech, that large-scale formalisation is happening in the Indian economy following the demonetisation drive, is largely hype. Now the government is trying to present itself as a pro-farmer, rural economy amongst other things, but the challenge in India is to separate hype from reality. Here in Pakistan, thankfully, the task is more limited and focused.

How far does the budget help us understand the intentions of Prime Minister Modi towards Pakistan? The answer is in the numbers, which thus far are telling a weak tale.

On DawnNews

Comments (13) Closed

Pakistan should focus on its own economy rather than worrying about its neighbours’.

Recommend0

shan

Feb 05, 2018 09:31am

Dude, focus on your country and keep your great brainy analysis yo yourself

Recommend0

wellwisher

Feb 05, 2018 09:34am

the record crash of stock market proves you right

Recommend0

socialism sucks

Feb 05, 2018 10:20am

Its socialism bro. It sucks. Instead of embracing free market policies and aggressively pushing labour, land and police reforms PM is pushing protectionist measures. Health insurance is alright but how can we get the money to get the job done?

Recommend0

Sanjeev

Feb 05, 2018 11:21am

@wellwisher : I work in the stock market and when the market continuously rise for several weeks, we have to use any excuse convincing to ill informed and uninformed people to engineer crash. It is for buying good fundamentally strong shares at huge discount and then sell them with huge profits when the panic reaction withers away. Buy when there is blood in the street (Nathan Rothschild). When there is panic selling, weak hands sell and strong hands buy. So never judge budgets on share markets. It is a different game altogether.

I am hoopeful that at least inidan Finance minister and Prime minister will tkae some special action to take care of your concern. Though you should note that PM has taken tough decision when needed and within the rulling time frame he has to ensure that he get re-elected. There is balance needed by tough measures and liniancy to certain extent thats what you can see in teh budget.

Surely, Modi knows how far he can go on giving freebees, thats why they are limited.

In general people should not expect freebees from govenment, because it comes from themselves and you cant go on punishing your cash cown (middle income group).

Recommend0

Mandeep

Feb 06, 2018 12:09am

This is a good budget.

Recommend0

FARRUKH

Feb 06, 2018 03:35am

I find this an odd editorial for such a wonderful and highly respected paper.

The WHO said last year we spent 0.5-0.8% of our public budget on health, let us focus on this rather than neighbours policies.

Recommend0

Amit Lunia

Feb 06, 2018 06:06am

Great Analysis by your editor..

The last para is a Gem..

Recommend0

Socialism sucks

Feb 06, 2018 02:12pm

@Pawan Maybe I dont Sir, but it is still quite baffling how this health care initiative will be funded. This budget reeks of wealth distribution but hardly wealth creation the LTGC tax is a proof of that. Create the pie then distribute dont think about distributing while there is no pie. Whats the point of such grand schemes when we lack infrastructures. We wasted 60 years of pushing down such schemes from leaders who were detached from ground realities. I only hope Modiji goes back to his reform agenda.

Recommend0

Vakku

Feb 06, 2018 03:07pm

@socialism sucks Money can be garnered by taxing personal wealth of Ultra Rich.Capitalism does not mean abandonment of poor.